ACC* - Accounting ACC* M115 Lecture Notes - Lecture 18: Retained Earnings, Income Statement

17 views3 pages

redminnow421

5 Oct 2020

School

CCC

Department

ACC* - Accounting

Course

ACC* - Accounting ACC* M115

Professor

Murphy

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

1) revenues gross increases in se resulting from business activity entered into for the purpose of earning income usually result in increase of assets. 2) expenses are decreases in se that result from operating business. Cost of assets consumed or services used in when revenues > expenses = net income. 3) dividends if company successful has net income, which represents an increase in. Net assets which are then available to distribute to stockholders. The distribution of cash or other assets to stockholders is called a divided. Transaction economic events of an enterprise that are recorded. External transactions between the company and an outside enterprise. Internal economic events that occur entirely within one company. There are activities a company does that are not transactions Hiring employees, answering the telephone, talking with customers. Employees will earn wages and merchandise delivered by suppliers. Have to analyze transactions and find effect on accounting equation the equation must be in balance after every transaction.

Related Questions

1. Creditors' claims on the assets of a company are called: (Points : 2)

2. The primary objective of financial accounting is: (Points : 2)

To serve the decision-making needs of internal users

To provide financial statements to help external users analyze and interpret an organization's activities

To monitor and control company activitiesTo provide information on both the costs and benefits of managing products and services

To know what, when and how muchto produce

3. Assets created by selling goods and services on credit are: (Points : 2)

4. The debt ratio is used: (Points : 2)

To measure the amount of equity relative to the expenses

To reflect the risk associated with a company's debts

Only by banks when a business applies for a loan

To determine how much debt a firm should pay off

5. Net Income: (Points : 2)

Decreases equity

Represents the amount of assets owners put into a business

Equals assets minus liabilities

Is the excess of revenues over expenses

Represents the owners' claims against assets

6. Internal users of accounting information include: (Points : 2)

Shareholders

Customers

Creditors

Government regulators

Line Supervisor

7. Risk is: (Points : 2)

Net income divided by average total assets

The reward for investment

The uncertainty about the expected return that will be earned from an investment

Unrelated to expected return

8. An example of an operating activity is: (Points : 2)

Paying wages

Purchasing office equipment

Borrowing money from a bank

Selling stock

Paying off a loan

9. Which accounting assumption assumes that all accounting information is reported monthly or yearly? (Points : 2)

Business entity assumption

Monetary unit assumption

Value assumption

Cost assumption

Time period assumption

10. Distributions of assets by a business to its stockholders are called: (Points : 2)

In addition to presenting the computed answers, please also discuss how you arrived at each answers the accounting problem asks. The accounting problem presents a companyâs balance sheet and income statement. The Diamond Gem Cleaning and Maintenance Service Company is in the business of contracting its cleaning and maintenance services to office buildings. The balance sheet and income statement have blank lines. Determine the values that would be appropriate for each blank line. Provide a narrative of how you arrived at each value. In doing so, explain the account being valued and its relationship to the other financial data. For example, if the accounts payable line was missing, explain that you can derive its value based on knowing all the other values of the current liabilities section. Then explain what an account liability is, as well as why it would belong in the current liabilities section of the balance sheet

Please refer to the income statement and balance sheet of the Diamond Gem Cleaning and Maintenance Service Company available down:

Superior papers will mention and explain the following elements when responding to the assignment question:

Provide correct balances for the blank financial account lines.

Provide a narrative about how the values were determined.

Provide a definition and explanation of each account line that was completed

Balance sheet
ASSETS

CURRENT ASSETS

Cash		225,971
Contracts receivables		[__A____]
Other assets		162,847

Total current assets		893,868

LONG TERM ASSETS

Equipment		[___B____]

TOTAL ASSETS		1,180,660

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable		[__C____]
Line of credit		85,000
Accrued expenses		72,495
Income tax payable		46,660
Current portion of notes payable		31,747
Deferred income taxes		78,460

Total current liabilities		571,697

LONG TERM LIABILITIES
Notes payable (long term)		172,467

TOTAL LIABILITIES		744,164

STOCKHOLDERS' EQUITY

Common stock	62,000
Additional paid-in capital	63,862

Retained Earnings	[___D___]

Total stockholders' equity		436,496

TOTAL LIABILITIES AND STOCKHOLDERS EQUITY		[___E___]

Income sheet

Contract Revenues	5,146,862

Contract Costs	[___F____]

Gross Profit	614,343

General and Administrative Expenses	322,356

Operating Income	291,987

Other Expense	25,770

Income Before Provision for Income Taxes	266,217

Provision for Income Taxes	[__G____]

Net Income	150,767


Retained Earnings, Beginning Balance	[__H____]

Net Income	150,767

Retained Earnings, Ending Balance	310,634

cyanmosquito456

The accounting firm of Brooke & Doggett, CPAs, recently completed the audits of three separate companies. During these audits, the following events were discovered, and Brooke & Doggett is trying to decide if each event is material. If an item is material, the CPA firm will insist that the company modify the financial statements.

In 2016, Major Company reported service revenues of $1,000,000 and earnings before tax of $80,000. Because of an accounting error, the company recorded $6,000 as revenue in 2016 for services that will not be performed until early 2017.

Willis Company plans to report a cash balance of $70,000. Because of an accounting error, this amount is $5,000 too high. Willis also plans to report total assets of $4,000,000 and net earnings of $415,000.

Adams Companyâs 2016 balance sheet shows a cash balance of $200,000 and total assets of $9,000,000. For 2016, the company had a net income of $750,000. These balances are all correct, but they would have been $5,000 higher if the president of the company had not claimed business travel expenses that were, in fact, the cost of personal vacations for him and his family. He charged the costs of these trips on the companyâs credit card. The president of Adams Company owns 25 percent of the business.

Required Write a memorandum to the partners of Brooke & Doggett, explaining whether each of these events is material.

ochrespider430

ACC* - Accounting ACC* M115 Lecture Notes - Lecture 18: Retained Earnings, Income Statement

Document Summary

Get access

Related Documents

ACC* - Accounting ACC* M115 Lecture Notes - Lecture 21: Deferral, Graph Paper, Accrual

ACC* - Accounting ACC* M115 Lecture Notes - Lecture 12: Cash Flow, Retained Earnings

ACC* - Accounting ACC* M115 Lecture Notes - Lecture 22: Trial Balance, Financial Statement, Income Statement

Related Questions